President Musharraf suffered a fresh blow in his bid to retain power in Pakistan today, as a Supreme Court ruling gave the former prime minister Nawaz Sharif the right to return from exile ahead of upcoming elections.

General Musharraf ousted Mr Sharif from the Pakistani leadership in a 1999 coup and forced him into exile after prosecuting him for hijacking, tax evasion and treason.

Mr Sharif has indicated that he is willing to stand against General Musharraf in general elections due next year. The President’s authority has now been so eroded that he threatened to declare a state of emergency earlier this month.

General Musharraf backed down but is suffering an unprecedented challenge to his power from both moderate Pakistanis outraged by his attempt to curb judicial independence and the defiance of radical Islamists, who have been inspired by Taleban loyalists along the lawless Afghan border.

Today’s judgment to allow Mr Sharif and his family back into the country will increase the pressure to restore full democracy yet further. The Sharifs have been living in London for seven years.

“The Sharifs can return to Pakistan unhindered,” Chief Justice Iftikhar Muhammad Chaudhry said.

“They had an inalienable right to return and remain in the country as citizens of Pakistan. Their safe return will not be restricted or hampered by the federal governments or provincial governments or any other agencies in any manner."

Mr Sharif’s supporters danced outside the court in Islamabad when the verdict was announced, chanting “Go Musharraf, go", “Musharraf is a dog” and “Long live Nawaz Sharif”.

The industrialist-turned-politician, who still officially heads his faction of the conservative Pakistan Muslim League party from exile, served as prime minister from 1990 to 1993, and again from 1997 to 1999. Then-army chief Musharraf ousted him after tensions between Mr Sharif’s government and the military.

Mr Sharif made a joint announcement in London in June with cricketer-turned-opposition politician Imran Khan that they were teaming up to seek an end to Musharraf’s “dictatorship”.

The Supreme Court ruling was made by Chief Justice Chaudhry, who was at the centre of the violent protests that rocked Pakistan earlier this year.

General Musharraf prompted furious demonstrations when he suspended the Chief Justice, who had made a series of rulings against the Government. He was reinstated last month by the Supreme Court, which has emerged as a powerful check on the President’s authority.

General Musharraf, who seized power in a coup in 1999, wants to be re-elected by Parliament in October and to stay on as head of the army, a role that he says is necessary to stop Pakistan falling into the hands of Islamic extremists.

Radical Islamists campaigning for Sharia law have been gaining in strength throughout Pakistan, they already have virtual control of the Afghan border regions such as North Waziristan.

Both Mr Sharif and another former prime minister, Benazir Bhutto, the leader of the rival Pakistan People’s Party, have said they will compete against the President in elections next year.

US officials, who have improved diplomatic relations with Pakistan since the September 11 attacks, have been increasing pressure on General Musharraf to ensure that those elections are free and fair.

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